Conference Kicked Off with Concern Over Subprime Woes Morningstar held its annual investment conference in Chicago this week. Jeffrey Gundlach, TCW Group chief investment officer, and recipient of Morningstar's 2006 Fixed-Income Manager of the Year award, opened Wednesday by giving his insights into the subprime mortgage crisis. He thinks the situation could get considerably worse before it gets better. The subprime trouble "has to do with people getting loans who wouldn't normally get loans," Gundlach said. "Subprime is a total unmitigated disaster, and it's only going to get worse."

Part of the problem is that "people didn't understand the risks" involved in investing in these securities, Gundlach said. "Now that the tide's going out, all the wreckage is showing up at the bottom of the sea," he said. "The delinquency rate is climbing, and it should climb at a very high rate."